JETBLUE AIRWAYS CORP (Form: 10-Q, Received: 11/12/2002 08:09:56)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-49728

JETBLUE AIRWAYS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		87-0617894 (I.R.S. Employer Identification No.)
80-02 Kew Gardens Road, Kew Gardens, New York (Address of principal executive offices)		11415 (Zip Code)

(718) 286-7902
(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No

As of October 31, 2002, there were 42,333,032 shares of the Registrant's Common Stock, par value $0.01, outstanding.

JetBlue Airways Corporation
FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets—September 30, 2002 and December 31, 2001	2
	Condensed Consolidated Statements of Income—Three and Nine Months Ended September 30, 2002 and 2001	3
	Condensed Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2002 and 2001	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	17
Item 4.	Controls and Procedures.	17
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 2.	Changes in Securities and Use of Proceeds	18
Item 5.	Other Information	18
Item 6.	Exhibits and Reports on Form 8-K	19
SIGNATURE		20
CERTIFICATIONS		21
EXHIBIT INDEX		23

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

			September 30, 2002			December 31, 2001
			(unaudited)
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	207,758		$	117,522
	Short-term investments			12,540			—
	Receivables, less allowance			10,910			20,791
	Inventories, less allowance			4,684			2,210
	Prepaid expenses and other			10,936			3,742

		Total current assets		246,828			144,265
PROPERTY AND EQUIPMENT
	Flight equipment			708,495			364,681
	Predelivery deposits for flight equipment			135,768			125,010

				844,263			489,691
	Less accumulated depreciation			21,804			9,523

				822,459			480,168
	Other property and equipment			44,857			29,023
	Less accumulated depreciation			8,411			4,313

				36,446			24,710

		Total property and equipment		858,905			504,878
PURCHASED TECHNOLOGY				64,475			3,500
OTHER ASSETS				32,300			21,130

TOTAL ASSETS			$	1,202,508		$	673,773

LIABILITIES AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable		$	35,318		$	24,549
	Air traffic liability			88,150			51,566
	Accrued salaries, wages and benefits			30,316			18,265
	Other accrued liabilities			14,912			15,980
	Short-term borrowings			24,202			28,781
	Current maturities of long-term debt			51,830			54,985

		Total current liabilities		244,728			194,126
LONG-TERM DEBT				523,814			290,665
DEFERRED CREDITS AND OTHER LIABILITIES				41,844			10,708
CONVERTIBLE REDEEMABLE PREFERRED STOCK				—			210,441
COMMON STOCKHOLDERS' EQUITY (DEFICIT)
	Common stock, 42,129,947 and 4,363,967 shares issued and outstanding in 2002 and 2001, respectively			421			44
	Additional paid-in capital			401,245			3,889
	Retained earnings (accumulated deficit)			629			(33,117	)
	Unearned compensation			(10,173	)		(2,983	)

		Total common stockholders' equity (deficit)		392,122			(32,167	)

TOTAL LIABILITIES AND COMMON STOCKHOLDERS' EQUITY (DEFICIT)			$	1,202,508		$	673,773

See accompanying notes to condensed consolidated financial statements.

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in thousands, except per share amounts)

			Three Months Ended September 30,						Nine Months Ended September 30,
			2002			2001			2002			2001
OPERATING REVENUES
	Passenger		$	160,239		$	80,274		$	433,625		$	218,391
	Other			5,022			2,334			14,308			6,465

		Total operating revenues		165,261			82,608			447,933			224,856
OPERATING EXPENSES
	Salaries, wages and benefits			41,747			21,680			112,930			56,460
	Aircraft fuel			21,170			11,896			51,137			30,958
	Aircraft rent			10,061			9,310			29,850			23,047
	Sales and marketing			11,795			7,460			33,430			19,559
	Landing fees and other rents			11,865			7,518			31,485			19,751
	Depreciation and amortization			6,926			2,725			17,333			7,136
	Maintenance materials and repairs			2,733			1,648			6,144			3,145
	Other operating expenses			36,503			16,155			92,078			42,008

		Total operating expenses		142,800			78,392			374,387			202,064

OPERATING INCOME				22,461			4,216			73,546			22,792
OTHER INCOME (EXPENSE)
	Interest expense			(5,738	)		(3,165	)		(14,650	)		(10,168	)
	Capitalized interest			1,415			2,037			4,147			6,520
	Interest income and other			1,943			288			4,362			1,642
	Airline Stabilization Act compensation			407			6,696			407			6,696

		Total other income (expense)		(1,973	)		5,856			(5,734	)		4,690

INCOME BEFORE INCOME TAXES				20,488			10,072			67,812			27,482
	Income tax expense			8,333			—			28,067			—

NET INCOME				12,155			10,072			39,745			27,482
	Preferred stock dividends			—			(4,145	)		(5,955	)		(12,089	)

NET INCOME APPLICABLE TO COMMON STOCKHOLDERS			$	12,155		$	5,927		$	33,790		$	15,393

EARNINGS PER COMMON SHARE:
	Basic		$	0.30		$	2.88		$	1.31		$	7.69

	Diluted		$	0.27		$	0.30		$	0.93		$	0.84

See accompanying notes to condensed consolidated financial statements.

JETBLUE AIRWAYS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

				Nine Months Ended September 30,
				2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income			$	39,745		$	27,482
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			17,333			7,136
		Deferred income taxes			28,067			—
		Changes in certain operating assets and liabilities			51,328			16,184
		Other, net			8,107			5,559

			Net cash provided by operating activities		144,580			56,361
CASH FLOWS FROM INVESTING ACTIVITIES
	Capital expenditures				(337,103	)		(141,683	)
	Predelivery deposits for flight equipment, net				(88,454	)		(48,895	)
	Acquisition of LiveTV, LLC, net of cash acquired				(80,471	)		—
	Purchases of short-term investments				(11,395	)		—
	Increase in security deposits				(3,419	)		(1,781	)

			Net cash used in investing activities		(520,842	)		(192,359	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from issuance of common stock				168,243			25
	Proceeds from issuance of long-term debt				280,000			80,000
	Proceeds from issuance of convertible redeemable preferred stock				377			176
	Proceeds from short-term borrowings				18,969			20,931
	Proceeds from aircraft sale and leaseback transactions				75,000			72,000
	Repayment of long-term debt				(50,006	)		(23,152	)
	Repayment of short-term borrowings				(23,548	)		(10,092	)
	Other, net				(2,537	)		(660	)

			Net cash provided by financing activities		466,498			139,228

INCREASE IN CASH AND CASH EQUIVALENTS					90,236			3,230
Cash and cash equivalents at beginning of period					117,522			34,403

Cash and cash equivalents at end of period				$	207,758		$	37,633

See accompanying notes to condensed consolidated financial statements.

JETBLUE AIRWAYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Basis of Presentation

Our consolidated financial statements include the accounts of JetBlue Airways Corporation ("JetBlue") and our wholly owned subsidiary, LiveTV, LLC ("LiveTV"), collectively "we" or the "Company". We have eliminated all intercompany transactions and balances in our condensed consolidated financial statements. LiveTV's results of operations are included from the date of acquisition. Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. These condensed consolidated financial statements and related notes should be read in conjunction with the Company's audited financial statements for the year ended December 31, 2001, which were included as part of the Company's registration statement on Form S-1 (Registration No. 333-82576), as declared effective by the Securities and Exchange Commission on April 11, 2002 and in its final prospectus filed on April 12, 2002.

These condensed consolidated financial statements are unaudited and have been prepared by us following the rules and regulations of the United States Securities and Exchange Commission and, in our opinion, reflect all adjustments consisting of normal recurring items which are necessary to present fairly the results for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as permitted by such rules and regulations; however, we believe that the disclosures are adequate to make the information presented not misleading. Operating results for the period presented herein are not necessarily indicative of the results that may be expected for the entire year.

Note 2—Acquisition of LiveTV

On September 27, 2002, we paid $80.2 million in cash to acquire the membership interests of LiveTV, which included the retirement of LiveTV's $39.0 million outstanding line of credit. LiveTV provides in-flight entertainment systems for commercial aircraft, including live in-seat satellite television, wireless aircraft data link service and cabin surveillance systems. The primary reason for the acquisition was to control the execution and marketing of an important aspect of our product. The determination and preliminary purchase price allocation, which are subject to changes as additional information becomes available, is as follows (in thousands):

Cash paid at acquisition		$	80,207
Technology previously acquired, net			3,063
Other			(625	)

	Preliminary purchase price	$	82,645

Current assets		$	969
Estimated fair value of property and equipment			25,041
Existing technology purchased			64,475
Liabilities assumed			(7,840	)

	Total allocated preliminary purchase price	$	82,645

The existing technology purchased is an intangible asset that will be amortized over seven years based on the average number of aircraft in service. We will incur amortization, depreciation and salaries and benefits expense which will be offset by a reduction in other operating expenses where the expense for payments by JetBlue under its long term contractual agreement to LiveTV had been recorded.

Note 3—Income Taxes

Income tax expense is based on estimated annual effective tax rates, which differ from the federal statutory rate of 35% primarily due to state income taxes, nondeductible expenses and stock option compensation. The difference for the three and nine months ended September 30, 2001 is also attributable to the reduction of the deferred tax asset valuation allowance.

During 2001, we recognized the benefit from the future use of operating loss carryforwards and other deferred tax assets because our evaluation of all the available evidence in assessing the realizability of the tax benefits of such deferred tax assets indicated that it is more likely than not that such deferred tax assets would be realized.

Note 4—Long-term Debt

During the nine months ended September 30, 2002, we issued $280 million in floating rate equipment notes due through 2014 which adjust quarterly or semi-annually based on the London Interbank Offered Rate. At September 30, 2002, the weighted average interest rate of our long-term debt was 3.81%, and maturities are $18.1 million for the remainder of 2002, $44.4 million in 2003, $40.6 million in 2004, $42.5 million in 2005, $41.5 million in 2006 and $41.3 million in 2007. Non-cash predelivery financing obtained in connection with the acquisition of new aircraft was zero and $31.3 million for the nine months ended September 30, 2002 and 2001, respectively.

Note 5—Comprehensive Income

Comprehensive income for the three and nine months ended September 30, 2002 and 2001 consisted solely of our net income as there were no other comprehensive income (loss) components.

Note 6—Employee Retirement Plan

The Company sponsors a profit sharing and 401(k) defined contribution plan. Company contributions expensed under this plan for the three months ended September 30, 2002 and 2001, totaled $4.3 million and $1.9 million, respectively. For the nine months ended September 30, 2002 and 2001, contributions expensed under the plan totaled $13.7 million and $5.6 million, respectively.

Note 7—Earnings Per Share

The following table shows how we computed basic and diluted earnings per common share:

		Three Months Ended September 30,				Nine Months Ended September 30,
		2002		2001		2002		2001
		(In thousands, except share data)
Numerator:
Net income applicable to common stockholders for basic earnings per share		$	12,155	$	5,927	$	33,790	$	15,393
Effect of dilutive securities:
	Preferred stock dividends		—		4,145		5,955		12,089

Net income applicable to common stockholders after assumed conversions for diluted earnings per share		$	12,155	$	10,072	$	39,745	$	27,482

Denominator:
Weighted-average shares outstanding for basic earnings per share			40,585,196		2,059,370		25,866,522		2,002,856
Effect of dilutive securities:
	Convertible preferred stock		—		26,638,676		11,917,141		26,638,676
	Unvested common stock		1,496,313		2,295,919		1,546,807		2,344,706
	Employee stock options		3,307,855		2,374,995		3,376,979		1,809,404

Adjusted weighted-average shares outstanding and assumed conversions for diluted earnings per share			45,389,364		33,368,960		42,707,449		32,795,642

Note 8—Commitments

At September 30, 2002, our firm aircraft orders consisted of 53 Airbus A320 aircraft scheduled for delivery through 2007. Committed expenditures for these aircraft and related equipment, including estimated amounts for contractual price escalations and predelivery deposits, will be approximately $181 million for the remainder of 2002, $510 million in 2003, $505 million in 2004, $440 million in 2005, $200 million in 2006 and $190 million in 2007. In addition, we have options to purchase 28 additional aircraft scheduled for delivery from 2004 through 2009. Financing has been arranged for the five remaining deliveries in 2002 and the first five of the 13 deliveries scheduled for 2003.

JetBlue and LiveTV were parties to a long-term agreement for the rental, installation and maintenance of the equipment and for the programming for the satellite TV service on each of JetBlue's aircraft prior to the acquisition of LiveTV. This commitment is now replaced by LiveTV's obligations under several long-term purchase agreements with suppliers to provide this equipment over the next five years. Committed expenditures under these agreements will be approximately $1.0 million for the remainder of 2002, $8.1 million in 2003, $6.1 million in 2004, $4.8 million in 2005, $4.5 million in 2006 and $3.9 million in 2007.

During 2002, we entered into noncancelable operating leases for two aircraft with terms of 18 and 20 years, respectively, and a new headquarters building for 10 years. Future minimum payments under these leases will be $0.7 million for the remainder of 2002, $7.3 million for 2003, $7.4 million for 2004, $8.9 million for 2005, $9.2 million for 2006, $9.1 million for 2007, and $81.7 million thereafter. These amounts are in addition to the minimum lease payments in Note 3 to the financial statements included in our final prospectus filed with the Securities and Exchange Commission on April 12, 2002.

Note 9—Initial Public Offering

On April 17, 2002, we raised $182.2 million from an initial public offering of 6,746,667 shares of our common stock at a price to the public of $27.00 per share, all of which shares were issued and sold by us. Upon the closing of the initial public offering, all issued and outstanding shares of Series A Preferred Stock and Series B Preferred Stock were converted into 30,692,125 shares of common stock. Net proceeds, after deducting underwriting discounts and commissions, of $169.4 million received by the Company upon the consummation of such offering, pending specific application, were invested in short-term, investment-grade, interest-bearing instruments, of which $80.2 million was used to acquire LiveTV. Total offering expenses were $2.0 million.

In conjunction with the initial public offering of our common stock, the authorized shares of our capital stock were increased to 500,000,000 shares of common stock and 25,000,000 shares of preferred stock. In addition, the stockholder rights plan, our employee stock purchase plan and the 2002 Stock Incentive Plan all became effective. Participants in the employee stock purchase plan received 161,360 shares on October 31, 2002 at $22.95 per share. See Note 15 to the financial statements included in our final prospectus filed with the Securities and Exchange Commission on April 12, 2002 for additional information.

Note 10—Stock Options

Certain options granted during 2001 and 2002 have exercise prices that are less than their deemed market value. Unearned compensation expense associated with these transactions is being amortized over the vesting periods of five or seven years and will be $463,000 for the remainder of 2002, $1,853,000 per year in 2003 through 2005, $1,784,000 in 2006, $1,251,000 in 2007 and $1,114,000 in 2008. Amortization of such deferred compensation amounted to $463,100 and $81,000 during the three months ended September 30, 2002 and 2001, respectively. For the nine months ended September 30, 2002 and 2001, amortization of deferred compensation was $1,301,800 and $81,000, respectively.

Note 11—Financial Instruments and Risk Management

We reflect the fair market value of our crude oil option contracts on the balance sheet as a component of short-term investments. We include unrealized gains and losses from changes in their value in interest income and other. Gains of $149,000 and $1,007,000 for the three and nine months ended September 30, 2002, respectively, have been recorded. These gains could reverse in future periods as the contracts expire. As of November 2002, we had hedged approximately 46% percent of our fuel requirements through December 31, 2003 and approximately 15% of our fuel requirements for the first quarter of 2004 by entering into crude oil options contracts with original terms of up to 16 months.

We determine the appropriate classification of debt securities at the time of purchase and reevaluate such designation as of each balance sheet date. Our short-term investments purchased during 2002 are classified as held-to-maturity securities and are stated at amortized cost.

Note 12—Loyalty Program

Our customer loyalty program, "TrueBlue" was launched in June 2002. We record a liability for the estimated incremental cost of providing free travel awards as points are earned.

Note 13—Stabilization Act Compensation

In August 2002, we received $1.2 million for the fourth and final installment under the Air Transportation Safety and System Stabilization Act, or the Stabilization Act. During 2002 and 2001, we received $3.2 million and $15.9 million, respectively, under the Stabilization Act and recognized compensation of $0.4 million and $18.7 million, respectively.

Note 14—Subsequent Event

On October 23, 2002, our Board of Directors approved a three-for-two stock split of our common stock. Shares will be distributed on December 12, 2002 to stockholders of record at the close of business on December 2, 2002. The shares and per share data presented in the accompanying condensed consolidated financial statements and notes thereto have not been restated to give effect to this pending stock split.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

Three Months Ended September 30, 2002 and 2001

Our net income for the three months ended September 30, 2002 increased to $12.2 million from $10.1 million for the three months ended September 30, 2001. We had operating income of $22.5 million for the third quarter of 2002 compared to operating income of $4.2 million in 2001. Diluted earnings per share was $0.27 for the third quarter of 2002 compared with $0.30 for the same period in 2001. For the three months ended September 30, 2001, our effective tax rate was zero due to the reduction of our deferred tax asset valuation allowance compared to 40.7% in 2002. Additionally, the third quarter 2002 earnings per share reflects an increase in the number of weighted average shares outstanding compared to 2001 as a result of our capital raising efforts, including our initial public offering in April 2002.

Our operating margin for the three months ended September 30, 2002 was 13.6% compared to 5.1% for the same period in 2001. The Company's results for the three months ended September 30, 2001 were negatively impacted by the September 11th terrorist attacks which shut down the U.S. air traffic control system for several days, resulting in a significant decline in air travel demand even after operations were allowed to resume. Following these events, the Air Transportation Safety and Systems Stabilization Act, or the Stabilization Act, was signed into law. Under the Stabilization Act, $0.4 million and $6.7 million in compensation was recognized for the three months ended September 30, 2002 and 2001, respectively. The results for the three months ended September 30, 2002 reflect reduced demand associated with the first anniversary of the September 11 ^th terrorist attacks, which compounded the normal seasonally weak demand for the month of September.

Operating Revenues. Operating revenues increased 100%, or $82.7 million, primarily due to an increase in passenger revenues. Increased passengers resulting from a 62.1% increase in departures and an 8.4 point increase in load factor, or $95.2 million, partially offset by a 8.7% decrease in yield, or $15.2 million, drove the increase in passenger revenue of $80.0 million for the three months ended September 30, 2002. Our capacity and traffic were higher in 2002 as a result of the seven new markets we entered into since 2001, including service initiated during the quarter between Long Beach and Oakland, California. Other revenue increased 115%, or $2.7 million, primarily due to increased change fees of $1.6 million resulting from more passengers.

Operating Expenses. Operating expenses increased 82.2%, or $64.4 million, due an average of 12.5 additional aircraft in service in 2002 which provided us with higher capacity. Operating capacity increased 96.9% to 2.23 billion available seat miles and an increase in transcontinental flights over 2001 contributed to a 21.5% increase in average stage length. Operating expenses per available seat mile

decreased 7.5% to 6.41 cents for the three months ended September 30, 2002. In detail, operating costs per available seat mile were:

			Three Months Ended September 30,
			Three Months Ended September 30,		Percent Change
			2002	2001	Percent Change
Operating expenses:
	Salaries, wages and benefits		1.87	1.92	(2.6	)%
	Aircraft fuel		.95	1.05	(9.5	)
	Aircraft rent		.45	.82	(45.1	)
	Sales and marketing		.53	.66	(19.7	)
	Landing fees and other rents		.53	.66	(19.7	)
	Depreciation and amortization		.31	.24	29.2
	Maintenance materials and repairs		.12	.15	(20.0	)
	Other operating expenses		1.65	1.43	15.4

		Total operating expenses	6.41	6.93	(7.5	)%

Cost per available seat mile increased by .12 cents, or 1.9%, over the second quarter of 2002 due primarily to an 8.5% increase in average fuel cost per gallon, timing of maintenance, higher terminal utility costs, higher credit card bad debts and the accelerated build-up of our Long Beach operations.

Salaries, wages and benefits increased 92.6%, or $20.1 million, due to an increase in average full-time equivalent employees of 78.7%, higher wage rates and a $1.9 million higher provision for our profit sharing plan in 2002 compared to 2001. Cost per available seat mile decreased 2.6% as a result of higher capacity.

Aircraft fuel expense increased 78.0%, or $9.3 million, due to 13.3 million more gallons of aircraft fuel consumed resulting in $10.6 million of additional fuel expense offset by a 5.9% decrease in average fuel cost per gallon, or $1.3 million. Cost per available seat mile decreased 9.5% primarily due to the decrease in average fuel cost per gallon.

Aircraft rent increased 8.1%, or $0.8 million due to having two more average aircraft under operating leases during the three months ended September 30, 2002 compared to 2001. Cost per available seat mile decreased 45.1% due to a lower percentage of the aircraft fleet being leased.

Sales and marketing expense increased 58.1%, or $4.3 million, due to increased advertising and higher credit card fees resulting from increased passenger revenues. On a cost per available seat mile basis, sales and marketing expense decreased 19.7% due to the increase in capacity and lower commissions due to elimination of travel agency commissions in April 2002. We booked the majority of our reservations through a combination of our website (65.1% in 2002) and our own reservation agents (31.8% in 2002).

Landing fees and other rents increased 57.8%, or $4.3 million, due to a 62.1% increase in departures. Cost per available seat mile decreased 19.7% due to higher capacity and an increase in average stage length.

Depreciation and amortization increased 154%, or $4.2 million, due primarily to having 11 more average owned aircraft during the three months ended September 30, 2002 compared to 2001 and higher levels of aircraft spare parts. Cost per available seat mile increased 29.2% due to a higher percentage of the aircraft fleet being owned versus leased. In future periods, depreciation and amortization expense will increase due to the existing technology and fixed assets acquired from LiveTV. For the fourth quarter of 2002 this increase is projected to be $1.6 million.

Maintenance materials and repairs increased 65.8%, or $1.1 million, due to 12.5 more average operating aircraft in 2002 compared to 2001. The cost per available seat mile decreased 20% due to higher capacity, offset by the completion of six airframe checks in 2002 compared to four in 2001.

Other operating expenses increased 126%, or $20.3 million. Higher variable costs associated with increased capacity and number of passengers served, along with increased insurance costs as a result of the September 2001 terrorist attacks, the accelerated build-up of Long Beach and operating costs for Terminal 6 at John F. Kennedy Airport, or JFK, which we now lease directly from the Port Authority of New York and New Jersey, or PANYNJ, were the primary reasons for the increase. Cost per available seat mile increased by 15.4% due primarily to increases in insurance, utilities and bad debts.

Other Income (Expense). Interest expense increased 81.3%, or $2.6 million, due to the debt financing of 11 additional aircraft resulting in $3.6 million of additional interest expense, offset by lower interest rates resulting in $1.0 million less interest expense. Capitalized interest decreased 30.5%, or $0.6 million, primarily due to lower interest rates. Interest income increased $1.5 million due to higher cash and investment balances in 2002. Other income includes gains on hedging activities of $149,000 for the three months ended September 30, 2002. Compensation recognized under the Stabilization Act was $0.4 million for the three months ended September 30, 2002 which represents $1.2 million cash received from the final installment, less amounts previously accrued. Compensation recognized for the three months ended September 30, 2001 was $6.7 million, which was our estimate of direct and incremental losses covered by the Stabilization Act for this period.

Nine Months Ended September 30, 2002 and 2001

Our net income for the nine months ended September 30, 2002 increased to $39.7 million from $27.5 million for the nine months ended September 30, 2001. We had operating income of $73.5 million and an operating margin of 16.4% for the first nine months of 2002 compared to operating income of $22.8 million and an operating margin of 10.1% in 2001. Diluted earnings per share was $0.93 and $0.84 for the nine months ended September 30, 2002 and 2001, respectively. For the nine months ended September 30, 2001, our effective tax rate was zero due to the reduction of our deferred tax asset valuation allowance compared to 41.4% for 2002. Our operating results for the nine months ended September 30, 2001 were negatively impacted by the September 11 ^th terrorist attacks.

Operating Revenues. Operating revenues increased 99.2%, or $223.1 million, primarily due to an increase in passenger revenues. Increased passengers resulting from a 65.9% increase in departures and a 4.8 point increase in load factor, or $249.3 million, partially offset by a 8.1% decrease in yield, or $34.1 million, drove the increase in passenger revenue of $215.2 million for the nine months ended September 30, 2002. Other revenue increased 121%, or $7.9 million, primarily due to increased change fees of $4.4 million resulting from more passengers and concession sales from Terminal 6 at JFK of $1.2 million.

Operating Expenses. Operating expenses increased 85.3%, or $172.3 million, due to an average of 11.8 additional aircraft, which provided us with higher capacity. Operating capacity increased 104% to 5.77 billion available seat miles due to scheduled capacity increases and more transcontinental flights over 2001.

Operating expenses per available seat mile decreased 9.0% to 6.48 cents. In detail, operating costs per available seat mile were:

			Nine Months Ended September 30,
			Nine Months Ended September 30,		Percent Change
			2002	2001	Percent Change
Operating expenses:
	Salaries, wages and benefits		1.96	1.99	(1.5	)%
	Aircraft fuel		.88	1.09	(19.3	)
	Aircraft rent		.52	.81	(35.8	)
	Sales and marketing		.58	.69	(15.9	)
	Landing fees and other rents		.55	.70	(21.4	)
	Depreciation and amortization		.30	.25	20.0
	Maintenance materials and repairs		.11	.11	—
	Other operating expenses		1.58	1.48	6.8

		Total operating expenses	6.48	7.12	(9.0	)%

Salaries, wages and benefits increased 100%, or $56.5 million, due to an increase in average full-time equivalent employees of 78.7%, higher wage rates and a $6.9 million higher provision for our profit sharing plan in 2002 compared to 2001. Cost per available seat mile decreased 1.5% as a result of higher capacity.

Aircraft fuel expense increased 65.2%, or $20.2 million, due to 36.4 million more gallons of aircraft fuel consumed resulting in $30.0 million of additional fuel expense offset by a 16.1% decrease in average fuel cost per gallon, or $9.8 million. Cost per available seat mile decreased 19.3% primarily due to the decrease in average fuel cost per gallon.

Aircraft rent increased 29.5%, or $6.8 million, primarily due to having four more average aircraft under operating leases during the nine months ended September 30, 2002 compared to 2001. Cost per available seat mile decreased 35.8% due to a lower percentage of the aircraft fleet being leased.

Sales and marketing expense increased 70.9%, or $13.9 million, due to increased advertising and higher credit card fees resulting from increased passenger revenues. On a cost per available seat mile basis, sales and marketing expense decreased 15.9% due to the increase in capacity and lower commissions due to elimination of travel agency commissions in April 2002. We booked the majority of our reservations through a combination of our website (60.8% in 2002) and our own reservation agents (35.1% in 2002).

Landing fees and other rents increased 59.4%, or $11.7 million, due to a 65.9% increase in departures. Cost per available seat mile decreased 21.4% due to higher capacity and an increase in average stage length.

Depreciation and amortization increased 143%, or $10.2 million, due primarily to eight more average owned aircraft in the nine months ended September 30, 2002 compared to 2001 in addition to higher levels of aircraft spare parts. Cost per available seat mile increased 20.0% as a result of a greater percentage of our fleet being owned.

Maintenance materials and repairs increased 95.4%, or $3.0 million, due to 11.8 more average aircraft and more scheduled airframe checks in 2002 compared to 2001. The cost per available seat mile remained flat as the increase in capacity was offset by the increase in airframe checks of which 12 were completed for the nine months ended September 30, 2002 compared to five for the same period in 2001.

Other operating expenses increased 119%, or $50.1 million. Higher variable costs associated with increased capacity and number of passengers served, along with increased insurance as a result of the September 2001 terrorist attacks and operating costs for Terminal 6 at JFK, which we now lease directly from PANYNJ, were the primary reasons for the increase. Cost per available seat mile increased 6.8%.

Other Income (Expense). Interest expense increased 44.1%, or $4.5 million, due to the debt financing of new aircraft deliveries resulting in $7.8 million of additional interest expense, offset by lower interest rates resulting in $3.3 million less interest expense. Capitalized interest decreased 36.4%, or $2.4 million, primarily due to lower interest rates. Interest income increased $1.7 million due to higher cash and investment balances in 2002. Other income includes gains on hedging activities of $1.0 million for the nine months ended September 30, 2002, which could reverse in future months as the contracts expire. Compensation recognized under the Stabilization Act, was $0.4 million for the nine months ended September 30, 2002 compared to $6.7 million for the nine months ended September 30, 2001.

The following table sets forth our operating statistics for the three and nine months ended September 30, 2002 and 2001:

	Three Months Ended September 30,								Nine Months Ended September 30,
	Three Months Ended September 30,						Percent Change		Nine Months Ended September 30,						Percent Change
	2002			2001			Percent Change		2002			2001			Percent Change
Revenue passengers		1,501,946			791,551		89.7			4,015,769			2,189,907		83.4
Revenue passenger miles (000)		1,888,151			863,855		118.6			4,817,962			2,230,548		116.0
Available seat miles (000)		2,227,254			1,131,013		96.9			5,774,037			2,837,609		103.5
Load factor		84.8	%		76.4	%	8.4	pts.		83.4	%		78.6	%	4.8	pts.
Breakeven load factor		75.5	%		74.6	%	0.9	pts.		72.0	%		72.7	%	(0.7	) pts.
Aircraft utilization (hours per day)		12.8			12.8		—			13.0			13.0		—
Average fare	$	106.69		$	101.41		5.2		$	107.98		$	99.73		8.3
Yield per passenger mile (cents)		8.49			9.29		(8.7	)		9.00			9.79		(8.1	)
Passenger revenue per available seat mile (cents)		7.19			7.10		1.3			7.51			7.70		(2.4	)
Operating revenue per available seat mile (cents)		7.42			7.30		1.6			7.76			7.92		(2.1	)
Operating expense per available seat mile (cents)		6.41			6.93		(7.5	)		6.48			7.12		(9.0	)
Departures		11,245			6,936		62.1			30,774			18,551		65.9
Average stage length (miles)		1,223			1,007		21.5			1,158			944		22.7
Average number of operating aircraft during period		28.4			15.9		78.6			25.0			13.2		90.0
Average fuel cost per gallon (cents)		74.80			79.53		(5.9	)		69.22			82.50		(16.1	)
Fuel gallons consumed (000)		28,301			14,958		89.2			73,876			37,524		96.9
Percent of sales through jetblue.com during period		65.1	%		45.1	%	20.0	pts.		60.8	%		41.0	%	19.8	pts.
Full-time equivalent employees at period end										3,352			1,876		78.7

Liquidity and Capital Resources

At September 30, 2002, we had cash and cash equivalents of $207.8 million, compared to $117.5 million at December 31, 2001. Cash flows from operating activities were $144.6 million for the nine months ended September 30, 2002 compared to $56.4 million for the nine months ended September 30, 2001. The increase in operating cash flows was primarily due to the growth of our business. In addition, as a result of our meeting certain financial targets, the amount of cash withheld by our credit card processor was reduced to zero during the second quarter of 2002. We rely primarily on operating cash flows to provide working capital. We presently have no lines of credit other than a short-term borrowing facility for certain aircraft predelivery deposits.

Investing activities. Investing activities for the nine months ended September 30, 2002 consisted of the acquisition of 10 Airbus A320 aircraft and one spare engine, predelivery deposits for ordered aircraft, the purchase of held-to-maturity investments, security deposits, facilities improvements, ground equipment purchases, and spare parts purchases, aggregating $441 million. In addition, we acquired LiveTV, LLC for $80 million on September 27, 2002.

Investing activities for the nine months ended September 30, 2001 consisted of the acquisition of four Airbus A320 aircraft, predelivery deposits for ordered aircraft and spare engines, security deposits for leased aircraft, facilities improvements, ground equipment purchases and spare parts purchases aggregating to $192 million.

Financing activities. Financing activities for the nine months ended September 30, 2002 consisted of (i) the incurrence of $280 million of 10- to 12- year floating rate equipment notes issued to various European banks secured by eight aircraft and a 5-year floating rate equipment note secured by a spare engine, (ii) the sale and leaseback over 18 years of one aircraft for $38.5 million financed by a Japanese institution, (iii) the sale and leaseback over 20 years of one aircraft for $36.5 million by a U.S. leasing institution, (iv) the repayment of debt of $50 million, and (v) the completion on April 17, 2002 of our initial public offering of 6,746,667 shares of our common stock for net proceeds of $167.4 million. We invested the net proceeds in short-term, investment-grade, interest-bearing instruments, pending their use to fund working capital and capital expenditures, including capital expenditures related to the purchase of aircraft and our acquisition of LiveTV.

Financing activities for the nine months ended September 30, 2001 consisted of (i) the issuance of $68 million of 12-year floating rate equipment notes secured by two aircraft, (ii) the issuance of $12 million of 5-year floating rate equipment notes secured by two spare engines, (iii) the sale and leaseback over 18 years of two aircraft for $72 million financed by a Japanese institution, (iv) short-term borrowings and (v) the repayment of long-term debt of $23 million.

Commitments. At September 30, 2002, maturities of long-term debt were $18.1 million for the remainder of 2002, $44.4 million in 2003, $40.6 million in 2004, $42.5 million in 2005, $41.5 million in 2006 and $41.3 million in 2007. In addition, at September 30, 2002, we were in compliance with the covenants of all of our debt and lease agreements.

At September 30, 2002, our firm aircraft orders consist of 53 Airbus A320 aircraft scheduled for delivery as follows: five during the remaining three months of 2002, 13 in 2003, 13 in 2004, 12 in 2005 and five each year in 2006 and 2007. Committed expenditures for these aircraft, including estimated amounts for contractual price escalations and predelivery deposits, will be $181 million for the remainder of 2002, $510 million in 2003, $505 million in 2004, $440 million in 2005, $200 million in 2006 and $190 million in 2007. In addition, we have options to acquire 28 additional aircraft through 2009. Financing has been arranged for all of the remaining five aircraft deliveries in 2002 and the first five deliveries scheduled for 2003, of which four will be financed under mortgages and six will be financed under operating leases. Although we believe that debt and/or lease financing should be available for our remaining aircraft deliveries, we cannot assure you that we will be able to secure financing on terms attractive to us, if at all, which may require us to modify our aircraft acquisition plans.

JetBlue and LiveTV were parties to a long-term agreement for the rental, installation and maintenance of the equipment and for the programming for the satellite TV service on each of JetBlue's aircraft prior to the acquisition of LiveTV by JetBlue. This commitment is now replaced by LiveTV's obligations under several long-term purchase agreements with suppliers to provide the equipment to be installed on its customers' aircraft over the next five years. Committed expenditures under these agreements will be approximately $1.0 million for the remainder of 2002, $8.1 million in 2003, $6.1 million in 2004, $4.8 million in 2005, $4.5 million in 2006 and $3.9 million in 2007.

During 2002, we entered into non-cancelable operating leases for two aircraft with terms of 18 and 20 years, respectively, and a new headquarters building for 10 years. Future minimum payments under these leases will be $0.7 million for the remainder of 2002, $7.3 million for 2003, $7.4 million for 2004, $8.9 million for 2005, $9.2 million for 2006, $9.1 million for 2007 and $81.7 million thereafter.

We operated a fleet of 31 Airbus A320 aircraft, of which 17 are owned and 14 are leased under operating leases as of September 30, 2002. The average age of our fleet was 15.4 months at September 30, 2002.

In June 2002, the PANYNJ approved a long-term lease through November 2006 with us for use of Terminal 6 and the adjoining ramp area at JFK. As a result of the lease, landing fees and other rents will increase $4.8 million per year and we will continue to be responsible for the operating and maintenance costs of the terminal.

We have $12.5 million of restricted cash pledged under standby letters of credit related to leases which expire at the end of the related lease terms. These balances are classified under other long term assets in our consolidated balance sheets.

New Accounting Standards

In April 2002, the Financial Accounting Standards Board, the FASB, issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. This Statement rescinds or amends existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The adoption of this standard is not expected to have an impact on our financial condition or results of operations.

In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activitie s, which nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Benefits and Other Costs to Exit and Activity (including Certain Costs incurred in a Restructuring) . SFAS No . 146 changes the way in which liabilities are recognized for an exit or disposal activity. This standard, which is applicable to exit or disposal activities initiated subsequent to December 31, 2002 is not expected to have an impact on our financial condition or results of operations.

Other Information

Stabilization Act. On August 27, 2002, we received $1.2 million as the fourth and final installment of compensation under the Stabilization Act, making our total compensation $19.1 million. During 2002 and 2001, we received $3.2 million and $15.9 million, respectively under the Stabilization Act and recognized compensation of $0.4 million, and $18.7 million, respectively.

Aviation Insurance. As part of the Stabilization Act, the U.S. government has provided excess war risk coverage to the airline industry with a third party liability policy to cover losses to persons other than employees or passengers generally for renewable 60-day periods, currently in effect until December 15, 2002. The excess war risk coverage was reduced to $1.5 billion per event which was the coverage prior to the government providing this insurance. We cannot predict whether the government will continue to renew this insurance or how much our premiums would increase if alternative insurance carriers were to provide this coverage.

Recent Awards. In November, 2002, JetBlue was rated "Best Domestic Airline" by Condé Nast Traveler 2002 Readers' Choice Awards out of all U.S. airlines. We were also named "Best Airline—Coach," for the second consecutive year, and "Best Value" by the magazine in their 2002 Business Travel Awards which were published in October of 2002.

Outlook. We expect our capacity to increase approximately 77 to 79 percent in the fourth quarter of 2002 compared to the fourth quarter of 2001. Average stage length is projected to be 1,130 miles over the same period. We currently expect our cost per available seat mile to decline slightly during the fourth quarter, assuming no additional increases in average fuel prices. We continue to add service, as indicated by our latest announcement to initiate daily non-stop service between JFK and Las Vegas, NV in November 2002 with plans to increase service to four daily round trip flights by March 2003. Our forecasted weighted average shares outstanding for diluted earnings per share, adjusted for the 3-for-2 stock split announced in October that will occur in December, are 68.7 million for the fourth quarter and 65.2 million for year ended 2002, based on certain assumptions.

The fourth quarter will include all of the operations of LiveTV in our consolidated results, which we expect to be immaterial over the next few years and mildly accretive to earnings per share thereafter, assuming no third party contracts. We will incur additional amortization, depreciation and salaries expense which will be offset by a reduction in other operating expenses where the expense for payments by JetBlue under its long term contractual agreement to LiveTV were previously recorded.

The current financial condition of the airline industry is at one the lowest points in history. The industry suffered losses in 2001 due to weak economic conditions which was further impacted by the terrorist attacks of September 11. Since September 11th, most airlines have announced reductions in capacity, service and employees. The industry will suffer significant losses in 2002 which are expected to continue into 2003. In addition, since the attacks, several airlines, including US Airways, have filed for bankruptcy and others may follow. Although we have been able to raise capital, remain profitable and continue to grow in this difficult industry environment, we may be subject to the following factors that could harm us and the airline industry:

•: the increased likelihood of U.S. military involvement in Iraq and the Middle East which could result in reduced demand for air travel and increased fuel prices.
•: continued consolidation in the airline industry, which has been limited in the past. Recently, the Department of Transportation approved the code-share and frequent flyer reciprocity agreement between US Airways and United Air Lines and further alliances are under review. We continue to not be a member of any marketing alliance.
•: increased competitive pressures as the major airlines continue to reduce their costs to compete with low-cost carriers, such as us.

We believe that we are well positioned to continue to grow and be successful in this environment, absent factors outside of our control.

Risk Factor Related to our Acquisition of LiveTV. On September 27, 2002, we acquired all the membership interests of LiveTV, a provider of in-flight entertainment, which is outside our previous line of business. Acquisitions often involve risks, including:

•: difficulties in integrating the operations, technologies, products and personnel of LiveTV;
•: diversion of management's attention from normal daily operations of the business;
•: the potential loss of key employees of LiveTV;
•: inability to maintain uniform standards, controls, policies and procedures; and
•: insufficient experience in entering into new product or technology markets.

The failure of us to properly integrate the operations of LiveTV could harm our business.

Forward-Looking Information. This report contains forward-looking statements relating to future events and our future performance including, without limitation, statements regarding financial forecasts or projections, our expectations, beliefs, intentions or future strategies that are signified by the words "expects", "anticipates", "intends", "believes" or similar language. Our actual results and the timing of certain events could differ materially from those expressed in the forward-looking statements.

All forward-looking statements included in this report are based on information available to us on the date of this report. It is routine for our internal projections and expectations to change as the year or each quarter in the year progress, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations may change prior to the end of each quarter or the year. Although these expectations may change, we may not inform you if they do. Our policy is generally to provide our expectations only once per quarter, and not to update that information until the next quarter.

You should understand that many important factors, in addition to those discussed in this report, could cause our results to differ materially from those expressed in the forward-looking statements. These factors include, without limitation, the continually changing airline industry and regulatory environment following the recent terrorist attacks and threats, future terrorist attacks or fear of such attacks, our limited operating history, our ability to implement our growth strategy, our fixed obligations, our ability to establish lines of credit or obtain financing from third parties, our dependence on the New York market, our ability to renew or replace gate leases, our competitive environment, problems with our aircraft, economic and other conditions in the markets in which we operate, our reliance on third parties and sole suppliers, governmental regulation, our reliance on one type of aircraft and on automated systems, increases in maintenance costs, fuel prices, insurance premiums and purchase prices of aircraft, our failure to properly integrate LiveTV, the loss of key personnel and potential problems with our workforce including work stoppages and seasonal fluctuations in our operating results.

Additional information concerning these and other factors which could cause differences between forward-looking statements and future actual results is contained in Item 3. Risk Factors contained in our final prospectus filed with the Securities and Exchange Commission on April 12, 2002.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in market risk from the information provided in Item 11h. Quantitative and Qualitative Disclosures About Market Risk in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our final prospectus filed with the Securities and Exchange Commission on April 12, 2002. See Note 11 to the unaudited condensed consolidated financial statements for additional information.

Item 4. Controls and Procedures.

An evaluation was performed under the supervision and with the participation of the Company's management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, of the effectiveness of our disclosure controls and procedures within 90 days prior to the date of the filing of this report. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported as specified in the SEC's rules and forms. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to their evaluation.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of our business, we are party to various legal actions, which we believe are incidental to the operation of our business. We believe that the outcome of the proceedings to which we are currently a party will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 2. Changes in Securities and Use of Proceeds.

(a) None

(b) None

(d) On April 17, 2002, we consummated the initial public offering of 6,746,667 shares of our common stock, $0.01 par value. The shares of common stock sold in the offering were registered under the Securities Act of 1933, as amended on a Registration Statement (Registration No. 333-82576) that was declared effective by the Securities and Exchange Commission on April 11, 2002. The net proceeds to us from the offering were $167.4 million after deducting discounts and commissions paid to the underwriters and other expenses incurred in connection with the offering. From April 17, 2002 to September 30, 2002, we invested such net offering proceeds in short-term, investment-grade, interest-bearing instruments, of which $80.2 million was used to acquire LiveTV, LLC on September 27, 2002.

Item 5. Other Information

Director Appointment

On August 7, 2002, the board of directors appointed Michael Lazarus to fill the vacancy on our audit committee created by the resignation of David Ferguson on April 30, 2002.

Customer Loyalty Program

On June 18, 2002, we announced, "TrueBlue", our customer loyalty program. Under TrueBlue, customers that participate in the program earn points for each one-way flight with us. The number of points awarded per flight depends on the length of the flight and points are automatically doubled when flights are booked via our website through December 31, 2002. TrueBlue program participants are awarded a round-trip flight upon accumulating 100 points. Customers who wish to participate in the TrueBlue program may visit our website at www.jetblue.com to enroll.

Qualified Trading Plans

Our Executive Vice President and Chief Financial Officer, John Owen, and our Executive Vice President, General Counsel and Secretary, Thomas Kelly, have each informed us that, in order to diversify their investment portfolios while avoiding conflicts of interest or the appearance of any such conflict that might arise from their positions with us, they have established written plans in accordance with SEC Rule 10b5-1 for gradually liquidating a portion of their holdings of our common stock. Both plans provide for weekly stock sales and expire in October 2003 for Mr. Kelly and in December 2003 for Mr. Owen. These plans do not prohibit Mr. Owen or Mr. Kelly from executing additional transactions with respect to our stock.

Three-for-Two Stock Split

On October 23, 2002, our Board of Directors declared a three-for-two stock split of our common stock. The three-for-two split will be distributed on December 12, 2002 to stockholders of record on December 2, 2002. The stock split will be effected pursuant to a stock dividend.

Sarbanes-Oxley Act

Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, our Chief Executive Officer and Chief Financial Officer have provided certain certifications to the Securities and Exchange Commission. These certifications accompanied this report when filed with the Commission, but are not set forth herein.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit Number		Description
10.1		GDL Patent License Agreement between Harris Corporation and LiveTV, LLC, dated as of September 27, 2002.
99.1		Press Release, dated October 24, 2002, issued by JetBlue Airways Corporation

(b) Reports on Form 8-K.

•: Current Report dated September 9, 2002, reporting under Item 5. "Other Events and Regulation FD Disclosure" our intention to acquire the membership interests in LiveTV, LLC.
•: Current Report dated September 27, 2002, reporting under Item 2. "Acquisitions or Dispositions of Assets" and Item 5. "Other Events and Regulation FD Disclosure" our acquisition of LiveTV, LLC. No financial statements were filed with the report.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		JETBLUE AIRWAYS CORPORATION (Registrant)
Date: November 12, 2002		By:		/s/ HOLLY L. NELSON Vice President and Controller (principal accounting officer)

CERTIFICATIONS

I, David G. Neeleman, certify that:

1.: I have reviewed this quarterly report on Form 10-Q of JetBlue Airways Corporation;
2.: Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.: Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.: The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.: The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002

By:

/s/ DAVID G. NEELEMAN

Chief Executive Officer

I, John D. Owen, certify that:

1.: I have reviewed this quarterly report on Form 10-Q of JetBlue Airways Corporation;
2.: Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.: Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.: The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a): designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b): evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c): presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.: The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a): all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b): any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.: The registrant's other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002

By:

/s/ JOHN D. OWEN

Executive Vice President and
Chief Financial Officer

EXHIBIT INDEX

Exhibit Number		Exhibit
10.1		GDL Patent License Agreement between Harris Corporation and LiveTV, LLC, dated as of September 27, 2002.
99.1		Press Release, dated October 24, 2002, issued by JetBlue Airways Corporation.

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INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Item 4. Controls and Procedures.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 2. Changes in Securities and Use of Proceeds.

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

SIGNATURE
CERTIFICATIONS
EXHIBIT INDEX

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Exhibit 10.1

HARRIS—LIVETV GDL PATENT LICENSE AGREEMENT

This Agreement is effective as of the 27th day of September 2002 (hereinafter the "Effective Date") by and between HARRIS CORPORATION ("HARRIS"), a corporation organized and existing under the laws of the State of Delaware, acting through its Government Communications Systems Division (GCSD) having a place of business at Palm Bay, Florida, and LIVETV, LLC ("LIVETV"), a Delaware limited liability company having its principal place of business in Irvine, California.

RECITALS

A.: HARRIS is the owner of certain Patents in the United States and other countries with respect to its Ground Data Link technology, and proposes to make certain of such rights available to LIVETV on the terms set forth in this Agreement.
B.: LIVETV is the licensee of certain Patents pertaining to satellite communications, airborne antennas, receivers and signal distribution, and in-flight entertainment equipment in the United States and other countries pursuant to the HARRIS-LIVETV Technology License Agreement, which license is exclusive in certain specified fields of operation.
C.: LIVETV is desirous of obtaining rights to utilize HARRIS's Ground Data Link technology, and to that end, is willing to grant to HARRIS certain rights under its exclusive license to the LIVETV Patents granted in the HARRIS-LIVETV Technology License Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, HARRIS and LIVETV agree as follows:

Article 1—Definitions

In this Agreement, unless the context clearly means otherwise, any reference to "including" (and any variant thereof, e.g., "includes") means "including but not limited to," any reference to "and" means "and/or," and any use of the singular form includes the plural. Terms not defined herein will have the meanings in the HARRIS-LIVETV Technology License Agreement. In addition, the following words and phrases will have the meanings set forth below:

1.1 "Audio-Video System" means any non-satellite-based video and/or audio system this is capable of and intended for distributing in-flight entertainment on commercial and/or general aviation aircraft.

1.2 "Aviation Information Services" means the services and commercial products in support of services, offered individually or in combination in the Commercial Aviation Services Market set forth in Schedule 1.2 attached hereto and incorporated herein.

1.3 "Broadcast Systems" means any satellite-based video and/or audio system that is capable of and intended for receiving and distributing in-flight entertainment on commercial aircraft and general aviation aircraft.

1.4 "Commercial Aviation Services Market" means the worldwide commercial air transport, commercial air cargo, business aviation and general aviation markets and the offering of non-developmental products in support of commercial services (i.e., services equivalent to services to commercial airlines) to military and governmental agencies, excluding Unmanned Aerial Vehicles (UAVs), space related products and services, and Air Traffic Control (ATC) applications.

1.5 "GDL" means Ground Data Link.

1.6 "GDL Field of Use" means the provision of Aviation Information Services in the Commercial Aviation Services Market.

1.7 "Ground Data Link" means the bi-directional data communications link, however designated, developed by Harris to permit wireless communication with aircraft.

1.8 "Harris GDL Patents" means the United States, European, and Canadian Patents set forth on Schedule 1.8 attached hereto and incorporated herein and any other Patents later owned or controlled by HARRIS or any Affiliate one or more claims of which would, absent the licenses granted herein, be infringed by any activity of LIVETV using GDL technology in the GDL Field of Use.

1.9 "Harris-LIVETV Technology License Agreement" means the technology license agreement entered into between HARRIS and LIVETV dated September 27, 2002, entitled "HARRIS-LIVETV TECHNOLOGY LICENSE AGREEMENT."

1.10 "HARRIS Products" means products, systems or services that are designed, made, used, Sold, exchanged for consideration or otherwise disposed of by or on behalf of HARRIS.

1.11 "In-Seat Audio-Video System" means any video and/or audio system that is capable of and intended for distributing in-flight entertainment to seats (not overhead) on commercial aircraft.

1.12 "Intellectual Property" means any and all intellectual property or other proprietary rights in and to copyrights, patents, computer software, technical information, technology, trademarks and/or trade names.

1.13 "LIVETV Field of Operations" means the designing, developing, manufacturing, marketing and selling of all products and services listed in subsection 1.13.1 below related to Broadcast Systems (including any component thereof) and subsection 1.13.2 below related to In-Seat Audio-Video systems (including any component thereof) and other activities in furtherance thereof.

1.13.1 Broadcast Systems.

1.13.1.1 Worldwide for all commercial aircraft types and general aviation aircraft : external antenna assembly, radome, antenna control subsystem, interface assembly, multi-channel receiver modulators, and all cables, wire harnesses, software and installation kits, used to receive, decode and distribute satellite-based video and/or audio signals to an aircraft audio/video distribution system;

1.13.1.2 Worldwide for all general aviation aircraft and all commercial aircraft types : audio/video in-seat distribution systems comprised of control line replaceable units, headend line replaceable units, distribution boxes, in-seat electronic boxes, video monitors, passenger control units and all cables, harnesses and installation kits used for proper functioning of a Broadcast System, including all operation and application software;

1.13.1.3 For Broadcast Systems Sold by LIVETV or its sublicensees : Program management services to direct and control the design, installation and certification of Broadcast Systems for customers of LIVETV or its sublicensees; installation design and installation of Broadcast Systems, including external antenna assembly and all in-aircraft equipment; system certification services, seat modification, installation and certification services; and field support for the systems installed including line and shop maintenance; and

1.13.1.4 For Broadcast Systems, whether or not Sold by LIVETV : programming services including program acquisition, billing, and revenue distribution; customer services, passenger support, billing refunds, and complaint handling.

1.13.2 In-Seat Audio-Video Systems.

1.13.2.1 Worldwide for all commercial aircraft types and all general aviation aircraft : In-Seat Audio-Video Systems comprised of control line replaceable units, headend line replaceable units, distribution boxes, in-seat electronic boxes, video monitors, passenger control units and all cables, harnesses and installation kits used for proper functioning of an In-Seat Audio-Video System, including all operational and application software;

1.13.2.2 For In-Seat Audio-Video Systems Sold by LIVETV or its sublicensees : Program management services to direct and control the design, installation and certification of In-Seat Audio-Video Systems for customers of LIVETV or its sublicensees; installation design and installation of In-Seat Audio-Video Systems, including all in-aircraft equipment; system certification services, seat modification, installation and certification services; and field support for the systems installed including line and shop maintenance; and programming services including program acquisition, billing, and revenue distribution; customer services, passenger support, billing refunds, and complaint handling.

1.14 "LIVETV Patents" means all rights to Patents granted to LIVETV by HARRIS pursuant to the HARRIS-LIVETV Technology License Agreement.

1.15 "LIVETV Licensed Products" means LIVETV Products that, absent the licenses granted in this Agreement, would otherwise infringe one or more claims of one or more of the HARRIS GDL Patents.

1.16 "LIVETV Products" means products, systems or services that are designed, made, used, Sold, imported, exchanged for consideration or otherwise disposed of by or on behalf of LIVETV.

1.17 "Patents" means any and all forms of letters patent now or hereafter issued or granted anywhere in the world, including utility, model, and design patents, patents of addition, patents of importation, improvement patents, reissued and re-examined patents, all renewals and extensions thereof, and all applications for such patents, including original, divisional, continuation, and continuation-in-part applications, pending before any national Patent Office which have not been abandoned or expired and all rights afforded thereunder.

1.18 "Return License Patent License" means the royalty-free, fully paid-up, non-exclusive, worldwide, irrevocable, perpetual license in all fields of use outside the LIVETV Field of Operations to use Intellectual Property owned by LIVETV that is developed by or for LIVETV using Intellectual Property provided to LIVETV by HARRIS granted in Section IV.A. of the Harris-LIVETV Technology License Agreement.

1.19 "Sold" or "Sale" as it applies to goods or services means when LIVETV Licensed Products are billed out or otherwise disposed of, and shall be considered otherwise disposed of when incorporated into equipment, when otherwise put in use, when transferred to others, or when the services are agreed upon, regardless of the basis of compensation, if any. The term includes, but is not limited to, transfers by outright sale (transfer of title), lease or gift.

Article 2—Grant of Licenses

2.1 Subject to the obligation of LIVETV to make the reports and payments as specified in Article 3 herein, HARRIS hereby grants and agrees to grant to LIVETV, solely within the GDL Field of Use a non-exclusive, irrevocable, perpetual, world-wide license under the Harris GDL Patents to make, have made, use, distribute, lease, offer to sell, sell, import and otherwise dispose of LIVETV Licensed Products.

2.1.1 The license granted in this Section 2.1 is a royalty-bearing license, subject to the royalty payment provisions set forth in Article 3.

2.1.2 The license granted in this Section 2.1 includes the right to grant sublicenses of no greater scope to others, provided that LIVETV shall remain liable to HARRIS for the payment of royalties due, in accordance with Article 3, for Sales of products and/or services by any permitted sublicensee of LIVETV.

2.2 LIVETV hereby grants and agrees to grant to HARRIS, solely within the LIVETV Field of Operations and subject to the provisions of Section 2.2.1, a royalty-free, fully paid-up, non-exclusive, irrevocable, perpetual, worldwide license under the LIVETV Patents, to make, have made, use, lease, offer to sell, sell, import and otherwise dispose of HARRIS GDL Products.

2.2.1 The license granted to HARRIS in this Section 2.2 does not extend to the right of HARRIS to make or have made, use, lease, offer to sell, sell, import or otherwise dispose of Broadcast Systems or In-Seat Audio-Video Systems.

2.2.2 The license granted in this Section 2.2 includes the right of HARRIS to grant sublicenses to others under the LIVETV Patents within the LIVETV Field of Operation, to make, have made, use, lease, offer to sell, sell, import and otherwise dispose of GDL products.

2.3 LIVETV hereby extends, and agrees to extend, the Return License Patent License to permit the making, having made, using, leasing, distributing, offering to sell, selling, importing and otherwise disposing of HARRIS GDL Products within the LIVETV Field of Operations.

2.3.1 The extension of the Return License granted in this Section 2.3 pertains solely to the permitted fields of use of the license, and does not otherwise alter any rights or obligations of either party in or under the Return License.

2.4 HARRIS covenants and agrees that it will not at any time enforce or permit any other Person to enforce against LIVETV or any Affiliate, transferee, sublicensee, subcontractor, vendee, or customer under and in accordance with Section 2.1 above, any Patents (excluding HARRIS GDL Patents) and other intellectual property owned or controlled (such that the assurance provided in this Section can be granted thereunder without payment to others, other than to an Affiliate or an employee of HARRIS or any Affiliate) by HARRIS or any Affiliate, if such enforcement would materially impair or burden LIVETV's ability to make, have made, use sell, offer for sale, distribute, import, lease or otherwise dispose of LIVETV Licensed Products covered by Harris GDL Patents within the GDL Field of Use.

Article 3—Compensation

3.1 In consideration of the licenses granted herein, LIVETV hereby agrees to pay royalties to HARRIS at the computed rate set forth below on all LIVETV Licensed Products Sold during the term of this Agreement by LIVETV.

3.1.1 For each aircraft containing LIVETV Licensed Products or for which LIVETV Licensed Product services are provided, LIVETV will pay HARRIS a royalty of Five Thousand dollars ($5,000.), payable in two equal installments of Two Thousand Five Hundred dollars ($2,500.). The first installment will be paid at the first time royalties are due with respect to each applicable aircraft pursuant to Section 3.2. The second installment will be due upon the second anniversary of the first installment due date.

3.2 Within thirty (30) days after the end of every Accounting Period, i.e., within thirty (30) days after each March 31, June 30, September 30 and December 31, beginning immediately after the Effective Date, LIVETV must deliver to HARRIS a true and accurate written report of all Sales of LIVETV Licensed Products during the preceding three (3) calendar months under this Agreement as are pertinent to calculating payments hereunder. This report shall consist of:

(1): the total number of aircraft containing LIVETV Licensed Products Sold during the relevant Accounting Period, the serial number of each of the LIVETV Licensed Products, and the name of the customer for the LIVETV Licensed Products, if any; and
(2): the amount of royalties due Licensor thereon, if any; and
(3): a certification by an officer or authorized representative of LIVETV that the Sales information reported therein is accurate and complete.

Such written reports shall be submitted, whether or not Sales occurred during the reporting period in question, and shall be addressed to:

Harris Corporation
Government Communications Systems Division
1000 Perimeter Road
MS-2-206
Palm Bay, FL 32905
Attention: Controller

Upon expiration or termination of this Agreement, all LIVETV Licensed Products which have been manufactured or are in the process of manufacture by LIVETV but not yet Sold shall be considered LIVETV Licensed Products and shall be included in the report following such expiration or termination.

3.3 Concurrently with the submission of each such report required by Section 3.2, LIVETV shall pay the royalties due on LIVETV Licensed Products reported therein.

3.4 During the term of this Agreement and for one (1) year thereafter, LIVETV agrees to keep complete and accurate records of its Sales of LIVETV Licensed Products under the license granted in this Agreement in sufficient detail to enable the royalties payable under Section 3.1 to be determined and the report of Sales of LIVETV Licensed Products under Section 3.2 to be verified.

3.5 LIVETV further agrees to permit such books and records to be examined from time to time to the extent necessary to verify the reports provided for in Section 3.2 and the royalties due and payable hereunder. Such examination shall be made at the expense of HARRIS by an auditor appointed by HARRIS, or at the request of LIVETV by an independent certified public accountant appointed by HARRIS on the understanding that LIVETV will be charged and will pay any fees associated with such investigation invoiced by such independent accountant in the event that errors are found in an amount in excess of five (5) percent of the aggregate royalty included in the reports subject to investigation.

3.6 The auditor or certified public accountant referred to in Section 3.5 will keep the results of his audit confidential but shall report to HARRIS only the royalties due and payable hereunder and the methods used in calculating such royalties. If any such examination reveals that LIVETV owes HARRIS additional royalties, said additional royalties shall be paid within thirty (30) days following completion of the respective examination and receipt of a written request from HARRIS plus interest on such additional royalties at the rate specified in Section 3.9 for the period commencing on the date on which royalties for the respective three months were due and ending on the date on which payment is actually made.

3.7 All payments to be made to HARRIS by LIVETV under this Agreement shall be made in United States Dollars by telegraphic transfer and shall be addressed to

Harris Corporation
Mellon Bank
P.O. Box 371553-M
Pittsburgh, PA 15251
Acct# 174-7042
ABA routing # 043000261
TIN# 340276860

3.8 Where the provisions of this Agreement require the conversion into United States Dollars of an amount initially computed in the currency of another country, the amount of United States Dollars payable under this Agreement shall be determined on the basis of the exchange rate of a leading bank of the country of Sale on the last day of the sixty (60) day period during which each such payment is due, or the date payment is made, whichever is sooner.

3.9 In the event that any amount payable under this Agreement is not paid by the date payment is due, LIVETV shall also pay interest on such amount at a per annum rate equal to two (2) percent plus the prime rate quoted by the Chase Manhattan Bank of New York, New York, on the date payment was due for the period from the due date to the date on which payment is actually made.

Article 4—Terms and Termination

4.1 This Agreement may be terminated by either party on thirty (30) days' notice to the other party if the other party fails substantially to perform any material obligation under this Agreement, and:

4.1.1 if such default can be remedied, it is not remedied within sixty (60) days after receipt of notice of specifying the nature of the default; or

4.1.2 if such default cannot be remedied, such default was willful and deliberate.

4.2 This Agreement may be terminated at any time by LIVETV on sixty (60) days' notice to HARRIS, provided there is at the time no default by LIVETV hereunder.

4.3 Without limiting the foregoing or any other right or remedy a party may have under this Agreement or otherwise, either party may terminate this Agreement upon written notice to the other party if:

4.3.1 the other party is or becomes insolvent or the normal conduct of the other party's business (or the other party's credit) becomes substantially impaired by credit problems;

4.3.2 the other party calls any meeting of creditors (in contemplation of any action under bankruptcy or insolvency laws) or a receiver or trustee is appointed for the other party or its assets; or

4.3.3 any petition, proceeding or action under any bankruptcy or insolvency laws is filed or instituted by one party, or any third party, against the other party, and such petition, proceeding or action is not dismissed within sixty (60) days of such filing or institution date.

4.4 Upon termination of this Agreement, all rights granted and obligations undertaken hereunder shall terminate forthwith, except that

4.4.1 any license granted to LIVETV under this Agreement will survive with respect to Intellectual Property in existence prior to termination, if the Agreement is terminated because of HARRIS being in default hereunder, provided, however, that the royalty provisions of Article 3 remain applicable to the license;

4.4.2 any license or extension thereof granted by LIVETV to HARRIS under this Agreement will survive indefinitely.

4.5 If any license granted under this Agreement is terminated, the licensee shall immediately cease practice of any inventions covered by licensed Patents and other Intellectual Property licensed under this Agreement. Notwithstanding the foregoing, any LIVETV Licensed Products or HARRIS Products that are at the time of such termination in-process for, or in the possession of, end-users and contain Intellectual Property licensed to LIVETV or HARRIS, respectively, pursuant to this Agreement shall not violate the terms of this Article 4.

4.6 Unless earlier terminated, the patent licenses granted herein, except as provided in Section 4.4 above, will automatically terminate upon expiration of the last-to-expire patents licensed hereunder.

Article 5—Notices

Any notice required or permitted to be given hereunder shall be in writing, and in the case of LIVETV shall be addressed to:

LiveTV, LLC
P.O. Box 37
M/S 101/4562
Melbourne, Fl. 32902
Tel.: (321) 729-7199
Attention: Jeffrey A. Frisco

with a copy to:

JetBlue Airways Corporation
80-02 Kew Gardens Road
Kew Gardens, NY 11415
Attention: James G. Hnat, Esq.

and in the case of HARRIS to:

Harris Corporation
1025 West NASA Boulevard
Melbourne, FL 32919
Attention: Legal Department MS-9

or to such other address or addresses as either of these companies may from time to time designate as its address by notice in writing to the other. All notices so addressed are effective when received.

Article 6—Representations and Warranties

6.1 HARRIS represents and warrants (such representation and warranty being made as of the Effective Date) that:

6.1.1 It owns or controls the Patents included within the Harris GDL Patents licensed to LIVETV under Article 2 above; and

6.1.2 Except for the existence of an opposition proceeding before the European Patent Office pertaining to EP No. 0774724, it has no notice of any threatened or existing judicial, administrative or other proceeding or claim which calls into question the validity of such Patents or the right of LIVETV to exercise any rights granted hereunder.

6.2 Except as aforesaid, HARRIS makes no warranty or representation regarding the following:

6.2.1 The scope or utility of any Patents licensed to LIVETV hereunder or the patentability of claimed subject matter;

6.2.2 The operability, safety, function, effectiveness or marketability of any LIVETV Products manufactured in accordance with rights granted under any licenses contained herein; and

6.2.3 Whether any LIVETV Product made, used or Sold under the licenses granted herein will be free of any intellectual property right of another person.

6.3 LIVETV represents and warrants (such representation and warranty being made as of the Effective Date) that:

6.3.1 It owns or controls the Return License Patents further licensed under Article 2 above; and

6.3.2 It has no notice of any threatened or existing judicial, administrative or other proceeding or claim which calls into question the validity of such Patents or the right of HARRIS to exercise any rights granted hereunder.

6.4 Except as aforesaid, LIVETV makes no warranty or representation regarding the following:

6.4.1 The scope or utility of any Patents licensed to HARRIS hereunder or the patentability of claimed subject matter;

6.4.2 The operability, safety, function, effectiveness or marketability of any HARRIS Products manufactured in accordance with rights granted under the licenses contained herein; and

6.4.3 Whether any HARRIS Product made, used or Sold under the further licenses granted herein will be free of any intellectual property right of another person.

6.5 The following are representations and warranties of each of the parties to and in favor of the other party.

6.5.1 Such party is a corporation or a limited liability company (as applicable) duly incorporated or formed, validly existing and in good standing under the laws of Delaware and has all corporate or other power and authority and all authorizations required to carry on its business as now conducted, except where the failure to have such authorizations would not, individually or in the aggregate, have a material adverse effect on such party.

6.5.2 The execution, delivery and performance by such party of this Agreement are within its powers (corporate or other) and have been duly authorized by all necessary action (corporate or other) on its part. This Agreement is a valid and binding agreement of such party enforceable against such party in accordance with its terms, subject:

6.5.2.1 to general equitable principles; and

6.5.2.2 to bankruptcy, insolvency, moratorium and similar laws of general applicability relating to or affecting creditors' rights.

6.5.3 The execution, delivery and performance by such party of this Agreement requires no notices, reports or filings with, or authorizations from, any governmental authority.

6.5.4 The execution and delivery by such party of this Agreement do not and will not:

6.5.4.1 contravene or conflict with such party's organizational documents;

6.5.4.2 contravene or conflict with or constitute a violation of any provision of any applicable law;

6.5.4.3 constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of such party, or to a loss of any benefit to which such party is entitled under, any contract binding upon such party or by which any of its properties or assets is or may be bound; or

6.5.4.4 result in the creation or imposition of any lien on the assets of such party.

Article 7—General Provisions

7.1 Each party agrees to comply with all applicable Untied States Government trade and export control laws and regulations with respect to Intellectual Property licensed from the other party hereunder.

7.2 Neither party will incur a lien on its rights granted hereunder without the other party's prior written consent.

7.3 Neither party indemnifies the other party under this Agreement against infringement of third party Intellectual Property rights for the manufacture, use, sale, offer for sale, lease or other disposition of the other party's products. If a third party shall assert that the making, using, or selling of any products that include any of the intellectual property licensed under this Agreement infringes that third party's intellectual property rights, the manufacturer of the product shall defend, indemnify and hold harmless the other party, provided that the other party has given the manufacturing party timely written notice of such assertion if applicable and full authority to resolve the matter with such third party at no expense to the other party.

7.4 No proprietary or confidential information is to be exchanged pursuant to this Agreement. If one party desires to disclose proprietary or confidential agreement to the other party, then such disclosure must occur pursuant to a separate Non-Disclosure Agreement between the parties relevant to such disclosure. In no event will either party be obligated to disclose any information which the laws and regulations of a governmental authority having jurisdiction over the party do not permit to be disclosed.

Article 8—Confidentiality

8.1 The parties hereto shall keep the terms of this Agreement confidential and shall neither now nor hereafter divulge the terms of this Agreement to any third party except:

8.1.1 to any court or governmental body or agency compelling such disclosure, but only to the extend so compelled; or

8.1.2 as otherwise may be required by any law and the rules or regulations promulgated under such law; or

8.1.3 either party may convey to third parties, including by press releases, that this Agreement exists, and the fact that a patent license has been entered into between HARRIS and LIVETV relating to GDL products and/or services, provided that the monetary requirements may not be disclosed. The parties will coordinate reasonably on the timing and content of any initial press release announcing the entry into this Agreement.

Article 9—Entire Agreement and Amendments

This instrument contains the entire and only agreement between the parties respecting the subject matter hereof, and supersedes and cancels all previous negotiations, commitments and writings in respect thereto. This Agreement may not be amended, supplemented, released, discharged, abandoned, changed or modified in any manner, orally or otherwise, except by an instrument in writing of concurrent or subsequent date signed by duly authorized officers or representative of each of the parties hereto.

Article 10—Trademarks, Trade Names and Patent Marking

10.1 In selling or promoting the sale of Harris Products or LIVETV Products, as the case may be, neither party shall use or refer to the trademarks or trade names of the other or to trademarks or trade names similar thereto.

10.2 LIVETV shall mark all LIVETV Licensed Products with notice in accordance with the statutes of the United States, Canada and European Patent Office relating to the marking of patented articles (see 35 U.S.C. § 287). Such marking shall be accomplished by fixing such notice on the LIVETV Licensed Product itself or, if this cannot be done, on the packaging in which it is contained.

Article 11—Miscellaneous

11.1. This Agreement shall be construed and the legal relations between the parties hereto shall be determined in accordance with the laws of the State of Florida.

11.2 If application of any one or more of the provisions of this Agreement shall be unlawful under applicable law and regulations, then the parties will attempt in good faith to make such alternative arrangements as may be legally permissible and which carry out as nearly as practicable the terms of this Agreement. Should any portion of this Agreement be deemed unenforceable by a court of competent jurisdiction, the remaining portion hereof shall remain unaffected and be interpreted as if such unenforceable portions were initially deleted.

11.3 Neither this Agreement nor any rights hereunder may be assigned or otherwise transferred by LIVETV without written consent of HARRIS, and any assignment or transfer without such consent shall be null and void. The acquisition of an interest in LIVETV shall not be considered an assignment or transfer for purposes of this Section.

11.4 The parties acknowledge and agree that irreparable damage may occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and such non-performance may not be compensable by the payment of damages. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement, this being in addition to any other remedy to which they may be entitled by law or equity.

11.5 The captions and/or headings in this Agreement are included for convenience of reference only and shall be ignored in the construction and interpretation hereof.

11.6. Any provisions of this Agreement may be waived, if and only if, such waiver is in writing and signed by the party against whom the waiver is to be effective.

11.7. No failure or delay by either party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege. The rights and remedies provided in this Agreement shall be cumulative and are not exclusive of any rights or remedies provided by law.

11.8 For the convenience of the parties, this Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.

11.9 Nothing herein modifies, revises or changes any restrictions or obligations of either party set forth in any other agreement between the parties, including those with respect to operations in, or forbearance from operating in, specified fields of operations.

11.10 EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

11.11 The parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

11.12 Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person or entity other than the parties any rights or remedies under or by reason of this Agreement.

11.13 No amendment, deletion or addition to this Agreement shall be effective unless in writing and executed by each party.

11.14 If it becomes necessary for either party to initiate litigation for the purpose of enforcing any of its rights hereunder or for the purpose of seeking damages for any violation of this Agreement then, in addition to any and all other judicial remedies that may be granted, the prevailing party shall be entitled to recover attorneys' fees and all other costs sustained by it in connection with that litigation.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in duplicate, on the date first written above, by its duly authorized officer or representative.

LIVETV, LLC		HARRIS CORPORATION
By:	/s/ JEFFREY FRISCO	By:	/s/ GARY L. MCARTHUR
Name:	Jeffrey Frisco	Name:	Gary L. McArthur
Title:	VP of Operations	Title:	VP of Corporate Development

Schedule 1.2

"Aviation Information Services" means the following services and commercial products in support of services, offered individually or in combination in the Commercial Aviation Services Market:

1.2.1 the design, development, certification, installation, operation or maintenance of computer software, computer hardware and other equipment, in each case related to on-board or on-ground data acquisition, recording, processing and transmission;

1.2.2 the development, integration and implementation of services to create an information link to improve an airline's operations and maintenance through the communication of data to and from the aircraft;

1.2.3 the design, development, certification, installation, operation or maintenance of computer software, computer hardware and other equipment related to data processing, translation and database services;

1.2.4 the design, development, certification, installation, operation or maintenance of computer software that analyzes or evaluates raw data to provide engine and aircraft trends, patterns and statistics;

1.2.5 the design, development, certification, installation, operation or maintenance of computer software that analyzes or evaluates raw data for engine and aircraft trends, patterns and statistics and provides alerts to the customer based on changes in such data;

1.2.6 the design, development, certification, installation, operation or maintenance of computer software that improves aircraft operational maintenance through aircraft systems, avionics, engine and APU diagnostics;

1.2.7 the integration and implementation of quality assurance services that assess flight performance (FOQA) and provide aircraft health status (MOQA);

1.2.8 the development, integration or implementation of services for electronic logs of cockpit and cabin functions;

1.2.9 the development, integration or implementation of cockpit services to increase aircraft productivity through providing reports on weight and balance, flight plans, departure, and pre-flight weather;

1.2.10 the development, integration or implementation of cabin services to improve cabin productivity through providing reports on inventory, discrepancies, flight attendant manuals, customer profiles, cabin departure and flight reports;

1.2.11 the development, integration or implementation of services associated with air to ground communications such as high priority messages, in-flight graphical weather and cabin communications;

1.2.12 the development, integration, implementation or provision of information, data, and related transmission services and solutions that use information flow to and from the aircraft to improve airline operating efficiencies such as fuel management, line maintenance assistance, maintenance operations assistance and other services and solutions that improve aircraft utilization; and

1.2.13 the development or management of command and control centers from which management solutions to problems related to aircraft maintenance, weather, operating conditions and other time critical factors will be developed and implemented based on information received from aircraft in flight.

1.2.14 Aviation Information Services does not include:

1.2.14.1 in-flight entertainment services and related products, which means any system that is capable of and intended for receiving or distributing in-flight entertainment or other information

or services directly to or for the benefit of passengers, except as mutually agreed on a case by case basis;

1.2.14.2 engine diagnostics services (other than data gathering and transmission) to support off-wing aircraft engine maintenance; and

1.2.14.3 shop maintenance of engines and aircraft.

Schedule 1.8—HARRIS GDL Patents

Number Patent	Issue Date	Title
US 6,047,165	4/4/00	Wireless, frequency-agile spread spectrum ground link-based aircraft data communication system
US 6,104,914	8/15/00	Wireless frequency-agile spread spectrum ground link-based aircraft data communication system having adaptive power control
US 6,108,523	8/22/00	Wireless, frequency-agile spread spectrum ground like-based aircraft data communication system with remote flight operations control center
US 6,148,179	11/14/00	Wireless spread spectrum ground link-based aircraft data communication system for engine event reporting
US 6,154,636	11/28/00	System and method of providing OOOI times of an aircraft
US 6,154,637	11/28/00	Wireless ground link-based aircraft data communication system with roaming feature
US 6,160,998	12/12/00	Wireless spread spectrum ground link-based aircraft data communication system with approach data messaging download
US 6,163,681	12/19/00	Wireless spread spectrum ground link-based aircraft data communication system with variable data rate
US 6,167,238	12/26/00	Wireless-based aircraft data communication system with automatic frequency control
US 6,167,239	12/26/00	Wireless spread spectrum ground link-based aircraft data communication system with airborne airline packet communications
US 6,173,159	1/9/01	Wireless spread spectrum ground link-based aircraft data communication system for updating flight management files
US 6,308,044	10/23/01	System and method of providing OOOI times of an aircraft
US 6,308,045	10/23/01	Wireless ground link-based aircraft data communication system with roaming feature
US 6,353,734	3/5/02	Wireless spread spectrum ground link-based aircraft data communication system for engine event reporting
EP 0774724	8/30/00	Wireless, frequency-agile spread spectrum ground link-based aircraft data communication system Note: The European Patent issued in the following countries: Switzerland, Germany, France, United Kingdom, Ireland, Italy, Netherlands and Sweden
CA 2,189,494 (application)		Wireless, frequency-agile spread spectrum ground link-based aircraft data communication system

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Exhibit 10.1

HARRIS—LIVETV GDL PATENT LICENSE AGREEMENT
RECITALS
Article 1—Definitions
Article 2—Grant of Licenses
Article 3—Compensation
Article 4—Terms and Termination
Article 5—Notices
Article 6—Representations and Warranties
Article 7—General Provisions
Article 8—Confidentiality
Article 9—Entire Agreement and Amendments
Article 10—Trademarks, Trade Names and Patent Marking
Article 11—Miscellaneous
Schedule 1.2
Schedule 1.8—HARRIS GDL Patents

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Exhibit 99.1

JetBlue Airways Announces Three-for-Two Stock Split

New York, NY (October 24, 2002) —JetBlue Airways Corporation (Nasdaq: JBLU) announced today that its Board of Directors has declared a three-for-two stock split of the company's common stock.

The three-for-two stock split will be distributed on December 12, 2002 to stockholders of record at the close of business on December 2, 2002. Cash will be paid in lieu of fractional shares. Once the stock split is completed, the number of outstanding shares of common stock will increase by 50 percent to approximately 63 million shares.

"JetBlue has a history of solid financial performance," said David Neeleman, CEO of JetBlue Airways. "We believe our low cost structure together with our preferred product and customer service provide the foundation for delivering long-term value for our stockholders."

About JetBlue JetBlue is a low-fare, low-cost passenger airline, which provides high-quality customer service. Since launching operations in February 2000, the airline has carried more than eight million passengers. JetBlue operates a fleet of 31 new Airbus A320 aircraft and is scheduled to place into service another five new A320s by the end of 2002. All JetBlue aircraft are outfitted with roomy all-leather seats each equipped with free live satellite television, offering up to 24 channels of DIRECTV® Programming at every seat.*

From its base at New York City's John F. Kennedy International Airport, JetBlue flies to: Fort Lauderdale, Fort Myers, Orlando, Tampa and West Palm Beach, FL; Buffalo, Rochester and Syracuse, NY; Long Beach, Oakland and Ontario, CA; Burlington, VT; New Orleans, LA; Denver, CO; Salt Lake City, UT; San Juan, Puerto Rico; and Seattle, WA. From Washington DC, the airline serves Fort Lauderdale, Long Beach and Oakland. JetBlue also serves Oakland, Las Vegas, NV and Salt Lake City from Long Beach.

With JetBlue, all seats are assigned, all travel is ticketless, all fares are one-way, and a Saturday night stay is never required. For more information, schedules and fares, please visit www.jetblue.com or call JetBlue reservations at 1-800-JETBLUE (538-2583).

* DIRECTV® service is not available on flights between New York City and San Juan, Puerto Rico.

This press release contains statements of a forward-looking nature relating to future events or future financial results of JetBlue that are based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward looking statements due to many factors, including without limitation, the continually changing industry and regulatory environment following recent terror attacks and threats, our limited operating history, our ability to implement our growth strategy, our fixed obligations, our dependence on the New York market, our ability to renew or replace gate leases, our competitive environment, problems with our aircraft, economic and other conditions in markets in which we operate, governmental regulations, increases in maintenance costs, fuel prices and insurance premiums, risks associated with our recent acquisition of LiveTV, and cyclical and seasonal fluctuations in the Company's operating results. Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to, the Company's registration statement on Form S-1, as amended. We undertake no obligation to update any forward-looking statements to reflect events or circumstances that may arise after the date of this release.

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Exhibit 99.1

JetBlue Airways Announces Three-for-Two Stock Split